Factoring services is a process where companies sell their invoices to a factor. The factor agrees to pay the company immediately for their invoices and then collects on those invoices from the customer. For example, if you have sales staff that are waiting for customer payment, it may be more advantageous to sell your outstanding invoices as soon as possible instead of holding onto them for months until they’re paid by customers.
How does factoring services work?
Factoring services are a great way for companies to get paid faster, get access to cash, or get access to credit. The process is simple:
· The company sends invoices to its customers.
· The customer pays the invoice on time (or late).
· The factoring company buys the invoices from the company and collects payment from the customer on behalf of the company. Once this happens, it has been “factored” – hence its name.
